Correlation Between Canso Credit and JFT Strategies

Can any of the company-specific risk be diversified away by investing in both Canso Credit and JFT Strategies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Canso Credit and JFT Strategies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canso Credit Trust and JFT Strategies, you can compare the effects of market volatilities on Canso Credit and JFT Strategies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Canso Credit with a short position of JFT Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Credit and JFT Strategies.

Diversification Opportunities for Canso Credit and JFT Strategies

-0.05

Correlation Coefficient

Canso Credit  JFT Strategies

Good diversification

The 3 months correlation between Canso and JFT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and JFT Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JFT Strategies and Canso Credit is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Canso Credit Trust are associated (or correlated) with JFT Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JFT Strategies has no effect on the direction of Canso Credit i.e., Canso Credit and JFT Strategies go up and down completely randomly.

Pair Corralation between Canso Credit and JFT Strategies

Assuming the 90 days trading horizon Canso Credit is expected to generate 1.73 times less return on investment than JFT Strategies. But when comparing it to its historical volatility, Canso Credit Trust is 2.41 times less risky than JFT Strategies. It trades about 0.13 of its potential returns per unit of risk. JFT Strategies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,470  in JFT Strategies on October 11, 2024 and sell it today you would earn a total of  42.00  from holding JFT Strategies or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canso Credit Trust  vs.  JFT Strategies

Canso Credit Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JFT Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JFT Strategies has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, JFT Strategies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canso Credit and JFT Strategies

The main advantage of trading using opposite Canso Credit and JFT Strategies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit position performs unexpectedly, JFT Strategies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in JFT Strategies will offset losses from the drop in JFT Strategies' long position.

The idea behind Canso Credit Trust and JFT Strategies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.